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Ingram Micro–HNA Group Deal Officially Closes; Ingram CFO, EVP To Depart
The world's largest IT distributor is now part of fast-growing $30 billion Chinese conglomerate HNA Group.
"Today marks a significant step forward in HNA Group's effort to create a global, one-stop provider of logistics and supply chain solutions and services," said Adam Tam, vice chairman and CEO of HNA Group, in a prepared statement. "We are excited to welcome Ingram Micro to the HNA Group family."
Now that the deal is completed, Ingram Micro Chief Financial Officer William Humes and Executive Vice President, Secretary and General Counsel Larry Boyd are slated to leave the company Dec. 16, - 10 days after the close of the $6 billion megadeal. They join Paul Read, Ingram Micro's former president and chief operating officer, as executives who have left the $43 billion, Irvine, Calif.-based distributor as the acquisition progressed.
In addition, the members of Ingram Micro's board of directors will be replaced by Humes; Boyd; HNA President Xiangdong Tan; Bharat Bhise, founder and CEO of Bravia Capital of Hong Kong; Ingram Micro CEO Alain Monié; Ingram Chairman Dale Laurance; and Jim McGovern, a former Under Secretary of the Air Force.
[RELATED: Ingram Micro CEO: Chinese Ownership Allows Company To Take More Risks And Boost Its Market Share In China]
Ingram Micro will cease trading on the New York Stock Exchange before the market opens today, making it the only one of North America's six largest IT distributors to be privately held. Ingram Micro had been trading on the New York Stock Exchange since November 1996, 17 years after the company's founding.
Tan said HNA Group is focused on building upon Ingram Micro's unparalleled global logistics and supply chain operations. HNA is a Hainan, China-based transportation and shipping powerhouse whose holdings include Hainan Airlines, China's fourth-largest airline.
"Working together, we believe there are significant opportunities to continue to expand Ingram Micro's delivery platform and portfolio of solutions offerings into high growth regions and provide customers across a wide range of industries with greater access to new market opportunities," Tan said in a statement.
Gina Mastantuono – Ingram Micro's executive vice president of finance since April 2013 – will be promoted to the CFO role on Dec. 16, and Augusto Aragone Coppola – Ingram Micro's vice president and associate general counsel since January 2015 – will be promoted to the EVP, secretary and general counsel role on Dec. 16.
Humes and Boyd will be eligible to receive a lump sum cash separation payment equal to twice their salary and target bonus, a pro-rated 2016 bonus, health insurance payments for 12 months, outplacement services and accelerated vesting of outstanding equity awards. Humes had been Ingram Micro's CFO since 2005, while Boyd joined Ingram Micro in 2000.
"The closing of this transaction represents a significant milestone on Ingram Micro's path to growing our business, Monie, Ingram Micro's CEO, said in a statement. "We are delighted to move forward with this partnership with HNA Group and excited by the opportunity to accelerate the development and delivery of an even stronger value proposition for Ingram Micro's vendors and customers globally."
The complex, far-reaching acquisition took 10 months to piece together, with the final element coming into place Friday morning with an announcement that Chinese antitrust authorities had approved the deal. Once that occurred, Ingram Micro's stock price jumped 3.5 percent from $37.56 per share to $38.87, just three cents below the agreed-upon payout $38.90 per share.
The two companies initiated China's State Administration of Foreign Exchange (SAFE) process on March 18 when they filed the initial paperwork.
Monie said last week that becoming part HNA will enable the distributor to gain market share in China and invest without being hamstrung by Wall Street. Although Ingram Micro has been operating independently in China for 18 years, Monie said it remains the third or fourth largest IT distributor in the 1.4-billion-person nation.
With the closing of the deal, Monie believes Ingram Micro has the chance to become the largest distributor in China. The acquisition is additionally expected to make it possible Ingram Micro to take more risks and invest more rapidly in its high-priority e-commerce, cloud and lifecycle services practices, Monie said.
The U.S. antitrust process was considered to be the deal's biggest potential stumbling block, and that had been successfully navigated by the beginning of November. Paul Bay, Ingram Micro's group president of the Americas, said last week that U.S. antitrust officials put Ingram Micro through "one of the most intense vetting processes" that he's ever experienced.
As part of the Committee on Foreign Investment in the United States (CFIUS) review, Bay said he had to travel to Washington D.C. and sit down with officials from nine U.S. government agencies - including the departments of State, Justice, Homeland Security, Commerce, Treasury and Defense - and discuss the potential national security impact of the Tianjin Tianhai acquisition.
Even though the process was arduous, Bay came away from it confident that solution providers will continue to be able to transact with the U.S. government through Ingram Micro.
Although U.S. antitrust officials have grown increasingly wary of Chinese ownership of U.S. technology assets, Ingram Micro and Promark -- its public sector-focused subsidiary -- do not hold contracts or sell products through its General Services Administration schedule that require a security clearance. Ingram Micro has said that under HNA, it would operate as a standalone entity with little interference.
Ingram Micro's shareholders approved the deal in June, with more than 99.8 percent voting in favor of the acquisition, with 0.1 percent voting against and 0.06 percent abstaining.